Channel NewsAsia

Portugal's financial system has weak "pockets": IMF

The IMF said that Portugal's financial system still had trouble spots after the international bailout, amid worries over a major Portuguese bank that roiled European stock markets.

WASHINGTON: The International Monetary Fund (IMF) on Thursday said that Portugal's financial system still had trouble spots after the international bailout, amid worries over a major Portuguese bank that roiled European stock markets.

Fears over the health of Banco Espirito Santo boiled over amid allegations that its parent company was covering up a 1.3 billion euro (US$1.8 billion) hole in its accounts. Portugal's financial market regulator suspended trading in shares of the bank, the country's largest by capitalization, after they plunged more than 11 percent to 0.54 euros.

"Pockets of vulnerability remain, warranting corrective measures in some cases and intrusive supervision in others," the International Monetary Fund said in a brief statement.

The IMF, which participated in Portugal's rescue with the European Commission and the European Central Bank, said it does not comment on individual financial institutions.

Portugal just emerged in May from the three-year, 78-billion-euro (US$106 billion) IMF-European Union bailout program that it sought as the country reeled from soaring borrowing costs on markets amid Greece's debt crisis.

In its statement, the IMF highlighted that the Portuguese banking system "has been able to endure the crisis without significant disruption, aided by substantial public capital support and extraordinary measures from the ECB."

 

Fears over the health of Banco Espirito Santo boiled over amid allegations that its parent company was covering up a 1.3 billion euro (US$1.8 billion) hole in its accounts. Portugal's financial market regulator suspended trading in shares of the bank, the country's largest by capitalization, after they plunged more than 11 percent to 0.54 euros.

"Pockets of vulnerability remain, warranting corrective measures in some cases and intrusive supervision in others," the International Monetary Fund said in a brief statement.

The IMF, which participated in Portugal's rescue with the European Commission and the European Central Bank, said it does not comment on individual financial institutions.

Portugal just emerged in May from the three-year, 78-billion-euro (US$106 billion) IMF-European Union bailout program that it sought as the country reeled from soaring borrowing costs on markets amid Greece's debt crisis.

In its statement, the IMF highlighted that the Portuguese banking system "has been able to endure the crisis without significant disruption, aided by substantial public capital support and extraordinary measures from the ECB."

Tweet Photos, Videos and Update on this Story to  #cna